The market is in a “wait and see” mode as investors are confronted by a lot of important news.

For one, today, tomorrow and Friday bring a host of economic news which stands to shed light on the severity of the current economic slump (see below).

Then too, the European summit begins tomorrow, amidst a lot of negative press. Finally, the Supreme Court is due to release its decision on the Obama administration’s healthcare plan tomorrow.

While it is not getting too much press yet, the “fiscal cliff” will begin to hog center stage in coming months, in spite of rumors that its deadline, December 31, will be pushed up to March 2013.

Actually, I think the uncertainties of the “cliff” are a major contributor to the weakening in our economy, more so than Europe’s problems. This is all about taxes and reduced spending to the tune of more than $1 trillion.

TODAY: The stock market needs some serious buyers or it will tumble lower.

What I don’t think is factored in yet is the likelihood that answers to the U.S., European and Asian economies and European problems won’t be forthcoming until fall, if then.

A better than expected increase in May’s Durable Goods of 1.1% vs. a decline of 0.2% in April failed to bump the futures up prior to the open, suggesting the Street is preoccupied with other issues.

I don’t expect much out of the Thursday/Friday European summit other than the same pre-school squabbling and BS we have been getting for over a year. I don’t think it matters to the stock market what the Supreme Court does, I think it will take time before a sustainable upmove in the market can develop.

We still have gridlock in Congress, that’s like a management of a company that doesn’t show up for work – un-American.

This kind of environment can produce attractive situations, but only selectively.

While horrendous conditions generally accompany market bottoms, I think it is premature to expect a big turn up now.

The market is seeking a level where it discounts negatives and uncertainties, and I think that requires lower prices and “time.”

Facebook (FB): Behaving better than could be expected in face of overall market weakness. It is now close to my projection of 34 – 36. I still think shorts are on the run.

EUROPE:

The European summit meeting starting on Thursday may produce some visibility as to whether the euro can be saved, or it may simply extend “uncertainty” for another time or another summit.

Get ready for a new euro-term – “dissolution risk,” what happens if you are in line to be compensated in euros, but the euro no longer exists. (see Bloomberg.com, “U.S. Banks Aren’t Nearly Ready for Coming European Crisis.” – Simon Johnson)

ECONOMIC INDICATORS: The Street is watching the economy for enough signs of weakness to prompt measures by the Fed to stimulate the economy. (bad is good !). Interest rates can’t get much lower. People on fixed incomes are without income on savings, insurance companies are forced to jump premiums because their treasuries yield next to nothing. Generally, they make their money on investments not insurance risk.

MONDAY:

Chicago Fed Activity Index (8:30): Dipped into negative territory to a minus 0.45 in May vs. a plus 0.08 in April. The Index encompasses 85 economic indicators drawn from production and income, sales, employment/unemployment, hours, consumption, housing, orders and inventories.

New Home Sales (10:00): Surged 7.6% in May to 369,000 units at an annual rate well above estimates that ran a 346,000 rate., Residential construction is expected to contribute positively to GDP this year for the first time since 2005. Sales advanced 3.3% in April after a 7.3% drop in March and 5.6% rise in February.

Kansas City Fed Mfg Index (11:00):Rebounded to 9 in May from 3 in Apil.

FRIDAY:

Personal Income (8:30):

Chicago PMI (9:45):

Consumer Sentiment (9:55):

George Brooks

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